There are good points and bad points for buying a new car. The truth is, in most cases you’re going to save a lot of money buying used. However, for some people buying new is what they need. Let’s go over some pros and cons of buying a new car to find out what will work best for your needs.
It Has a Warranty
You can find used cars with limited warranties too, but most of the time, the one that comes with the new car will be better. Often, they’ll include a limited warranty for up to one hundred thousand miles to the first person who purchases it. However, do read all the fine print.
Of course, this is a good thing for most people. Buying a new car feels great because it smells good and no one has mistreated it. It might be worth the loss of 20 percent of its value when you drive it off the lot after buying it, or it might not.
You Will Have More Choices
When you buy a new car, you automatically have many more choice as to the type of vehicle you’re going to buy. After all, you can even order the precise car you want online these days.
The Interest Rate Will Be Lower
Banks tend to favor new car buyers with lower interest rates. Often, someone with stellar credit can buy a car for 3 percent interest, which is almost as good as the zero interest which places also advertise but rarely actually offer.
You’ll Get the Best and Latest Technology and Features
Buying a new car affords you the opportunity to get the best and latest technology and features that you find important. For example, Wi-Fi, Bluetooth, OnStar, self-driving features, and more that people enjoy might not be available in older cars.
Depreciation Is Steep on a New Car
The one major con of a new car is really the fact that the moment you buy it and drive it off the lot, it will lose at least 20 percent of its value. For this reason, buying a new car is more beneficial if you plan to keep the car for a long time – more than five or six years.
Insurance Will Cost More for a New Car
When you buy a new car, one of the added expenses has to do with car insurance. Insurance companies charge more for new cars because they cost more to repair. Most used cars will be “totaled” out and not fixed while a brand-new car may be fixed even if it costs almost as much as the car to fix it.
Potentially Higher Resell Value
This comes with the caveat that you keep the car for five to six years before you sell it. Typically, the value won’t drop more after that time if you’ve taken good care of your car and not allowed it to be damaged. Since you are the only owner and can prove maintenance and have kept it in good working order, you’ll get the top Kelly Blue Book value for the car.
Higher Sales Tax
Another drawback to buying a new car is that you’ll pay a lot more sales tax. Of course, you’re going to pay tax on any vehicle even if it’s used, but new cars cost a lot more so their taxes will stay high longer.
Often a new car buyer chooses to buy new because they intend to keep it a minimum of six years, and they understand they are paying a premium to ensure that they get exactly what they want in terms of modern technology and design.